On October 9th, XPeng Motors announced internally that the head of the procurement department was suspended from duty, and multiple employees were cooperating with the investigation. According to informed sources, during the internal meeting on that day, Li Feng, the head of the procurement department, was suspended from duty. Several other employees were also named and asked to stay for further investigation. The number of people involved in this incident is higher compared to earlier this year.
Regarding this, XPeng Motors stated that the company’s actions are a normal anti-corruption and clean governance practice. ‘In the face of corrupt behavior, we will discover and correct it together without any tolerance.’ This incident has limited impact and does not affect business or production processes.
There have been signs of anti-corruption reform within XPeng Motors. In the personnel adjustment at the beginning of this year, Wang Fengying, former General Manager of Great Wall Motors, was appointed as President to oversee the company’s product planning, product matrix, and sales system. She reports to He Xiaopeng, Chairman and CEO of XPeng Motors.
After taking office, Wang Fengying initiated a series of reforms within XPeng, including budget cuts and cracking down on corruption. According to a previous report by 21st Century Economic Review, employees involved in procurement were taken away by the police for investigation, which was related to supplier contract issues. Additionally, travel budgets have also been tightened and adjusted.
Wang Fengying, previously known as the ‘Iron Lady’ in the automotive industry, had worked at Great Wall Motors for 30 years, which mainly focused on traditional fuel vehicles. This personnel adjustment was seen as a self-rescue action by XPeng Motors during a critical period of organizational restructuring.
On the one hand, there is a decline in sales, and the urgent need for reforming a standardized management system. In 2022, XPeng Motors faced a ‘Waterloo’ in terms of sales, with only 120,000 vehicles delivered throughout the year. Not only was it surpassed by leading new forces such as Li Auto and NIO, but it also failed to achieve half of its annual sales target.
In addition, both models P7i and G6 encountered difficulties in order delivery due to insufficient supply chain preparation after their launch. The core issue behind this lies in XPeng Motors, as a new player in the industry, focusing heavily on product research and development and neglecting the coordination and standardization of processes such as research and development, supply chain, production, and sales.
Oliver Wyman’s Partner, Zhang Junyi, previously stated that ‘For XPeng Motors, there are many fundamental organizational matters that need to be established.’ Wang Fengying is well-suited for the role of integrating and standardizing these reforms. Her extensive experience in the traditional automotive industry can help XPeng Motors address these pressing issues and get back on track for growth.
On the other hand, since last year, XPeng Motors has initiated multiple cost reduction and efficiency improvement measures internally, with cost reduction becoming one of its important goals this year.
At the XPeng Motors Q2 financial report meeting, He Xiaopeng stated that the goal is to achieve a 25% overall cost reduction by the end of 2024 and achieve a balanced budget by 2025. Currently, XPeng is developing new vehicle models based on the latest released SEPA 2.0 ‘Fuyao’ technology architecture, which can shorten the development cycle by 20%, and achieve an 80% rate of commonality for architectural components.
It is worth noting that the cooperation between XPeng Motors and Volkswagen will also contribute to cost reduction for XPeng Motors. In July of this year, Volkswagen announced an investment of approximately 700 million US dollars in XPeng Motors, acquiring a 4.99% stake. The two parties will collaborate on technology development to jointly create two new electric vehicle models, utilizing XPeng Motors’ connected car system and intelligent driving technology.